Secured Business Loans UK 2025: Complete Guide
Use property or assets as security to access £10k-£5m at 4-12% APR. Lower rates, higher amounts, but your property is at risk.
What Can You Use as Security?
- Commercial property: Business premises you own
- Residential property: Your home (second charge possible)
- Business assets: Equipment, vehicles (asset finance)
- Property portfolio: Multiple properties
- Land: Development or agricultural land
Loan-to-Value (LTV) Limits
How much you can borrow based on property value:
| Security Type | Max LTV | £300k Property |
|---|---|---|
| Commercial property (owner-occupied) | 70% | £210,000 |
| Residential property (your home) | 60-70% | £180,000-£210,000 |
| Second charge (existing mortgage) | 80% combined | Depends on equity |
Interest Rates by Security Type
- Commercial mortgage (owner-occupied): 4-7% APR
- Commercial mortgage (investment property): 5-9% APR
- Second charge on home: 6-12% APR
- Bridging loan (short-term): 0.5-1.5% monthly (6-18% APR equivalent)
Secured vs Unsecured: Cost Comparison
£100,000 Over 5 Years
- Secured (6% APR): £1,933/month, £15,980 interest
- Unsecured (15% APR): £2,379/month, £42,740 interest
- Savings with secured: £26,760 (63% less interest)
Risks of Secured Loans
⚠️ Critical Risks
- Property repossession: Lender can force sale if you default
- Negative equity risk: If property value falls, you may owe more than it's worth
- Lengthy legal process: If things go wrong, can take 12-18 months to resolve
- Personal guarantee usually still required: Directors liable beyond property value
Only use secured loans for investments with clear, predictable ROI. Never borrow more than you can afford from business cash flow alone.
When Secured Loans Make Sense
Good uses:
- ✅ Property purchase (commercial premises)
- ✅ Major business expansion with proven model
- ✅ Large equipment purchase (£100k+)
- ✅ Business acquisition
- ✅ Refinancing expensive unsecured debt
Bad uses:
- ❌ Speculative ventures
- ❌ Covering losses
- ❌ Paying personal debts
- ❌ Unproven business ideas
Application Process
- Property valuation: Surveyor visit (£300-£1,000)
- Legal work: Solicitor fees (£500-£2,000)
- Credit checks: Business and personal
- Financial review: 2-3 years accounts
- Offer: 3-6 weeks typical
- Completion: 1-2 weeks after offer
Total timeline: 4-8 weeks (vs 48 hours - 2 weeks for unsecured)
Conclusion
Secured loans offer lower rates (4-12% APR vs 8-35% unsecured) and higher amounts (up to £5m), but put your property at risk.
Choose secured if: You own property, need large amounts (£100k+), want lowest rates, have clear repayment plan from business cash flow.
Choose unsecured if: Don't own property, need under £100k, want fast approval, or aren't confident about repayment.
Compare Secured & Unsecured Options
We'll calculate whether secured or unsecured saves you more money based on your needs, property equity, and risk tolerance.
Compare Loan Options